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Republicans are expected to put repealing the Patient Protection and Affordable Care Act to a vote on Wednesday. Proving yet again that Kabuki is alive and well in Washington, D.C. Which makes what is about to unfold in Congress relatively straightforward to predict with a reasonable degree of confidence.

Here’s how the first three acts of the health care reform dance in Congress is likely to play out over the next several months.

Act 1: The Vote to Repeal:Republicans are planning to bring HR 2, the “The Repealing the Job-Killing Health-Care Law Act” to the floor on Wednesday, January 19th at 10:00 am eastern time (for those wanting to TiVo C-SPAN). The debate will (hopefully) be more substantive and civil than one might have expected before the tragedy in Tucson, but there will still be a good number of outrageous claims made by both sides. After all, everyone knows the PPACA will not be repealed so this is a purely political gesture. Republicans are fulfilling a campaign promise many of them made in the mid-term elections. Both sides will take the opportunity to throw red meat to their base (do Democrats throw blue meat?), sound bites will prevail, and pundits will be in punditry heaven.

This round will go to the Republicans. Democrats will score some hits, accusing GOP lawmakers of being in the pocket of the insurance companies, seeking to do away with those elements of the PPACA which are popular (guarantee issue, no pre-existing conditions, etc.), and more. Republicans will score their points, too, but their real win will come from the make-up of the majority that will pass the repeal bill. Republicans will be able to brag that the vote to repeal health care reform was more bipartisan than the vote to pass health care reform. And brag they will. The vote may not be very bipartisan, but it only takes one Democrat opposing their leadership to make the vote on HR 2 more bipartisan than the votes on HR 3590 and HR 4872 (the two bills that together make up the PPACA). The bipartisanship of repeal is a sound bite too sweet to ignore – it undercuts the punches scored by the other side while elevating the GOP’s hits. What’s not to like?

After passing the House, HR 2 will head over to the Senate where it may never be brought to a vote. The debate over repeal will quickly descend to playground rhetoric. Republicans will attack Democrats for playing keep-away on a vote. Given the numerous times the GOP manipulated Senate rules in the past couple of years, Democrats will use the “I’m rubber, you’re glue” defense and accuse Republicans of being hypocritical. If HR 2 does come up for a vote – or if there’s a debate over whether to bring the bill to the Senate floor – it will be because Democrats determine the political upside of doing so outweighs the political downside.

Regardless, Republicans know they cannot repeal the PPACA. Their goal in this Act is to make the effort and they’ll succeed in that regard.

Given the realities of modern-day politics I’m not saying that these easy changes will come easily. The Senate was unable to repeal the 1099 provisions of the PPACA last November. Maybe given the public’s hunger for civility and cooperation the parties will come together on some of these no-brainer changes to the health care reform law. But that might be wishful thinking.

At the end of the day (or more likely a few weeks) Congress will make have made these amendments to the PPACA all but a certainty of passing. What will be interesting is whether the combatants decide to pass these widely supported modifications on a stand-alone basis, as a single, limited package or if as part of legislation seeking more controversial changes. Again, the decision will be based on how each interprets the politics of the situation, but my guess is that we could see most of this low hanging fruit pass relatively quickly; Republicans because an important part of their base (the business community) wants these changes done quickly and Democrats to demonstrate their commitment to civility and cooperation.

Act 3: Picking a FightThen it gets interesting. Republicans will vote to deny funding for some provisions of the Patient Protection and Affordable Care Act. They’ll push bills in the House to eliminate key elements of the bill (the individual mandate for sure, the exchanges and the medical loss ratio provisions possibly). Senate Democrats may push for the public option provision eliminated from the PPACA near the end of the process that produced the new law. (The public option refers to establishing a government-run health plan aimed at competing with private carriers).

These controversial changes to the PPACA will be based on both ideology and politics (as is to be expected when talking about government). Some proposals will reflect the strong beliefs of one party or the other. The parties do have valid and substantive disagreements. The parties see the role of government differently. Given the same reform they expect different outcomes. They have different approaches to problem solving. As a result much of the debate over controversial changes to health care reform will be substantive.

But not all of it. Many of the amendments, budget cuts, investigatory hearings will be politically driven. President Obama is up for re-election in 2012 as is every member of the House and one-third of the Senate. Republicans know the results of the 2010 election were more the result of centrist voters abandoning Democrats as opposed to their embracing Republicans. The GOP is on probation. They need to define themselves over the next two years in a way that earns them another term – and perhaps the White House.

That this is easier said than done may be true, but that’s a topic for a different blog. What matters in the context of health care reform is that the PPACA matters to voters. The public (and media) pays attention to health care reform. Political points can no doubt be scored by efforts to reform the nation’s transportation system, but road building lacks the appeal (or cable news attention) that health care reform gets. (This is unfortunate and I’m not condoning it, but it’s important to recognize this fact). And politicians, like actors, are expert at playing to the crowd.

Kabuki theater is highly stylized with dramatic costumes and make-up. Politics may lack the accoutrements, but it’s no less stylized. Let the curtain rise!

The folks over at American Health Line are doing a series of guest posts discussing health policy developments over the the past year and what’s likely to happen in 2011. I was honored to be asked to participate and my contribution was posted today. Entitled “The Plot Will Thicken” it expresses my viewpoint that health care reform will continue to evolve over the next few years and especially in 2011. This doesn’t mean that every change will be for the better (which is an easy prediction to make since, depending on your perspective, what is “for the better” may be “for the worse.”) But it does mean what we think the Patient Protection and Affordable Care Act will do may not be what it actually does.

One reason is that the impact of the PPACA will vary to a significant extent by where you live and work. This aspect of the health care reform package hasn’t received a great deal of attention. While the PPACA is a federal law (two laws if you’re being technical — HR 3590 and HR 4872) state regulators and lawmakers will be responsible for its implementation. For example, Congress requires each state to have a health insurance exchange up-and-running by 2014 or have the Department of Health and Human Services run one for them. In the health care reform package they described in broad terms what those exchanges are supposed to do and how they’ll operate. The operative word here, however, is “broad.” States will determine whether all health plans will be eligible to participate in their exchanges, the role of navigators and brokers, the ability for consumers to enroll directly with a carrier directly through the exchange, and a lot more.

What the states decide on these questions will vary considerably. In California we’re seeing a push for a heavy government-hand in the marketplace. In other states the exchanges are likely to have a lighter touch, adopting the role of an information resource rather than negotiating with carriers. Regardless of the approach, the states will comply with federal requirements, but their impact on the market and stakeholders will vary considerably.

Another reason the Patient Protection and Affordable Care Act will continue to evolve is the political reality that the Congress convening in 2011 is far different from the Congress that passed HR 3590 and HR 4872 in 2010. The impact of Republican gains — at both the state and federal levels — cannot be ignored. Nor can the shadow that is already being cast by the 2012 presidential election.

The new Republican majority in the House of Representatives will try to repeal the PPACA and they will fail, but that doesn’t mean they will be unable to influence how the reforms are implemented and interpreted. And it doesn’t mean Congress won’t attempt to modify aspects of the law. Doing so will not be easy, but that doesn’t mean it’s an impossible task. We’re already seeing strong bi-partisan support for changing some elements of the law, for example, the 1099 reporting requirements. As more of the burdensome elements of the law become apparent the greater will be the pressure to make adjustments.

To assume that the law as we understand it today will remain as is over the next few years is to ignore the dynamic nature that is legislative and political change. Laws as complex and far-reaching as the PPACA are not set in stone. To be fair, they’re not set in sand either. They’re set in something more closely approximating Silly Putty. (Sorry, I couldn’t resist that one).

Even in California, one of the states that seemed immune to the conservative wave that swept across the rest of the country in the recent election, health care reform will evolve. There has been widespread concern among California brokers concerning their implicit exclusion from the exchanges. One reading of the law is that unlicensed navigators will perform the role of counseling consumers on the best health plan for their unique needs. Yet the board charged with running the exchange may realize the short-sightedness of this approach. I’m not saying they will. And until we see who is appointed to the board I wouldn’t bet on things getting better. Regardless, there will be a lot of folks (including CAHU and myself) working hard educate the exchange board, lawmakers and regulators concerning the value of brokers and how we can help achieve the shared goal of making health care coverage more affordable and accessible to Californians. Whether this effort will succeed remains to be seen — and its success if far from certain.

That health care reform will evolve doesn’t mean that brokers, providers and carriers (to name just a few of the groups impacted by the PPACA) should simply sit back and wait to see what happens. Brokers, for example, need to examine their business strategies, recognize that their world has changed and begin the process of adapting to it. Some readers of this blog (and we’ll no doubt hear from them in the comments section, below) are convinced that brokers specializing in the sale and service of individual policies are doomed to extinction and no amount of changes in the PPACA will change them. Given that reasonable people can disagree, others have expressed their intent to diversify into other product lines or market segments, but to continue to be fully engaged in the individual market.

How individual brokers (or physicians or carriers) respond to the changes resulting from implementation of the Patient Protection and Affordable Care Act will depend on their tolerance for risk, their ability and willingness to adapt, the nature of their current business, the state or states they operate in, and the like. What’s important for all of us to recognize, however, is that we need to keep an eye on those changes resulting from implementation of the Patient Protection and Affordable Care Act. Because the changes will be changing, too.

The meaning and intent of legislation is often in the eye of the beholder. That’s why they invented courts. And the courts are where the interpretation of the medical loss ratio provisions in the Patient Protection and Affordable Care Act are likely to wind up. What will make such suits especially interesting is that the new health care reform bill wasn’t passed by Congress in the usual way. As a result, statements of legislative intent are lacking.

The usual route of legislation is through a Congressional conference committee in which differences between the House and Senate versions of the bill are ironed out – and where formal statements of intent are drafted, debated and published. The path of health care reform was different. The legislation was headed for a conference committee when, in Senator Scott Brown, a Republican, was elected from Massachusetts. This gave the GOP caucus, if they stayed united, the votes needed to block any bill from coming to the floor. And on the PPACA, Republicans were united in their opposition. Democratic leaders worked around this legislative roadblock by having the Senate pass the House legislation (HR 3590) and then both chambers passing a reconciliation bill (HR 4872). This allowed Democrats to pass health care reform with a majority vote instead of the super-majority which would have been required had the legislation gone the more traditional route.

But now the Department of Health and Human Services has to promulgate regulations that implement the medical loss ratio provisions of the new health care reform law. These are the provisions that require individual and small group carriers to spend 80 percent of the premium they take in on claims and health quality expenditures (large group policies have to spend 85 percent of premium on these costs). What goes into the calculation of this percentage will determine the impact of this part of the law.

Legislation is like the framing of a house. For example, the recent health care reforms the President signed into law provides the basic structure for a new way of doing business. But that’s all. Similarly, when a contractor puts up the frame of a house it provides a sense of where things are headed, giving a clear sense of the broad outline of what’s coming. But without the carpenters, plumbers, painters and other craftsmen, it’s not a home. Same with legislation. Without the regulators, judges, businesses and civilians interpreting, implementing and simply trying to figure out how things are supposed to work, the legislation is merely a law, not a part of life.

Nothing like an overwrought metaphor to start off a blog posting, but there you go. What got me thinking about this was coming across some material I wrote in the aftermath of California’s comprehensive small group health care reform. Best known as AB 1672 the law took effect in 1993. The legislation included guarantee issue for all small groups, limits on how carriers could rate for risk and a state-run purchasing pool. In short, AB 1672 changed the way small businesses shopped for, purchased and renewed their coverage. Immediately after the legislation was signed into law there was tremendous consternation among health insurance brokers, carriers, and others. Clients had questions. Entrepreneurs wondered about their future. Executives needed to figure out how to adapt their businesses to the new world. Eventually, they did and have prospered.

With the passage of HR 4872 and HR 3590 (the bills embodying President Barack Obama’s health care reform plan) the anxiety, fear and confusion is palpable in ways very similar to the early 90s in California. Which is reassuring. Because we too often forget that we’ve all survived tectonic shifts in the business before. All states enacted some version of health care reform in the past couple of decades. Yet, for the most part, the transition worked out. (There are exceptions. The state reforms in Washington and Tennessee, for example, needed to be dramatically rewritten when they proved impractical and ineffective. And they were).

There was also significant consternation when the Health Insurance Portability and Accountability Act (much better known as HIPAA) became law in 1996. And many were concerned about the Children’s Health Insurance Program. And let’s not even get started on the fear generated when Medicare was first enacted in the 60s. In the end, however, the insurance industry, business community and the public adapt and even prosper. In short, it’s a familiar drill. Markets change. Regulations change. Products change. Been there. Done that.

Yes, President Obama’s health care reform plan will have much greater consequences than state laws and even HIPAA. The new law touches upon more people and a greater part of the economy than Medicare and Medicaid. Yet, it is far from the government takeover of health care that some critics contend. The new law does not create a single payer system. Nor does it do away with private enterprise. As Howard Fineman wrote recently in Newsweek, “If this (health care reform) is socialism, then Warren Buffett is Karl Marx.” (Please note, this is not an invitation for a host of screeds on the Obama Administration, Republicans, Democrats, television pundits, the mainstream media or the state of American politics. We’ve had more than enough comments along those lines on this blog already. If you absolutely have to, go ahead, but please do not feel obliged to add to the heap).

Yes, the new laws will require change. But keep in mind, insurance companies, and health insurance companies in particular, have long been one of the most regulated industries in the country. Those regulations will change because of the new law. There will be more of them. But it’s not like regulations are being imposed for the first time.

Think of it this way, if the government was taking over health care and the health insurance industry, would there be so many people spending so much time figuring out how to deal with the reforms? Brick walls are pretty easy to identify and to deal with – find a new job. Instead we have a much more challenging task: we have to be ready to adapt the way we do our jobs to an uncertain future, but a future that includes a role for us.

And when I say “uncertain future,” I mean uncertain. That’s because, as in the stretched metaphor above, legislation is just the starting point, the framework, for defining that future. There’s a lot more to come. The good news is, for the most part, the regulations, court decisions, carrier policies, etc. will bring some clarity and certainty to the situation.

What will the exchanges look like? The law says there will be exchanges, they will be run by the states, and that nothing prevents brokers from selling their products. There’s more, but it’s more framework along these lines. How the exchanges actually work is unknown at this time, but we’ll be learning more over the next few years.

And even when the regulations come out there’s this nasty thing called reality that tends to make its presence known. The best laid plans of mice and regulators are no match for 300 million Americans. What will give health care reform shape and substance is how Americans use the new system; what parts they seize and what aspects they ignore.

People who know they are going to be impacted by the new law want to know what those impacts are. The anticipation of change, like the anticipation of a shot or dentist visit (or worse, a shot during a dentist’s visit) is usually worse than the actual shot and/or visit. But for now, anticipation is all we have. The framework is there. The details are not.

So what to do? Worrying simply adds to the stress. Fretting is non-productive. Nothing is going to come as a surprise. And nothing will come suddenly. So the smart thing to do is to prepare.

Health care reform was passed by Congress today. It’s as simple as that. And as complicated. The legislation will do far less than either its proponents or opponents claim. But the legislation will change the insurance industry. It will begin to address some of the drivers of skyrocketing medical costs. It will aggregate more power and influence in government while it is far from a government takeover.

The political impact of health care reform legislation will have far reaching political ramifications for years to come. The Senate health care reform package and the associated clean-up legislation were passed exclusively with Democratic votes. Which means if, over time, the program is deemed by voters as successful the electoral benefits of the program will accrue almost exclusively to Democrats. And if the program is rejected by voters it will be Democrats who are punished.

The vote in the House of Representatives – 219-to-212 to pass the Senate health care reform bill and 220-to-211 in favor of the clean-up legislation – is historic by any definition of the term. Many Presidents of both parties had tried to pass health care reform. Many Congresses had considered such legislation. To President Barack Obama and the 111th United States Congress goes the credit (or blame) for actually taking action.

Their bill is more moderate than some that had been proposed (the proposals of both Presidents Bill Clinton and Richard Nixon were in many ways more far reaching) and far more liberal than others. Yet the politics, policy and process has polarized the nation in ways few issues have before. (I find it ironic that many of those marching against today’s health care reform today were doing much the same against the Viet Nam War in the 60s and early 70s – or condemning those who did).

The House vote today means that, once signed, the Senate health care reform bill, HR 3590, becomes the law of the land. However, virtually no one in Congress or the Administration likes that bill as written. Consequently, the House passed a companion bill, HR 4872, that makes several significant changes to the HR 3590. Most significantly, the companion bill can be considered by the Senate under established parliamentary rules that bypass the filibuster process. This means the clean-up bill can be passed by a simple majority of the Senate – 51 votes. Senate Majority Leader Harry Reid has assured House Speaker Nancy Pelosi he has rounded up the necessary votes. However, success is neither automatic nor guaranteed. Republicans have the ability to delay passage of the clean-up legislation and might be able to have key elements of it removed.

This means there will be two signing ceremonies concerning health care reform: in the first President Obama will sign into law the Senate health care reform bill that no one likes. In the second, President Obama will sign into law a measure that virtually everyone agrees makes the first bill better. American politics being what it is today, however, we will first witness the spectacle of Republicans trying to defeat legislation that contains provisions they would likely admit improve the law that they failed to defeat today. No wonder Alice in Wonderland is the most popular movie in the land today. The body politic has fallen through the looking glass.

As a result of tonight’s action, Congress has addressed the easiest part of health care reform: changing how insurance companies act and are regulated. These “market reforms” are meaningful. Some, although not all, were necessary. But in a real sense the measures enacted represent low hanging fruit. Because the reality is that insurance companies don’t determine insurance premiums in a vacuum. Congress has taken on the easy villains in this drama: the greedy insurance companies. But everyone knows (and a few will admit) that health costs will continue to increase at an unacceptable rate. This means lawmakers will soon be forced to address the real driver of increasing health insurance premiums: medical costs that increase at twice the rate of general inflation. Doing so will be more difficult than beating up on insurance carriers, but eventually there’s no escaping the need to address root causes.

Then there’s the inevitable law suits. State legislators are already passing laws to exempt their citizens from elements of the health care reform package (specifically the requirement imposed on virtually all Americans to obtain health care coverage). And any legislation of this magnitude is a boon for lawyers in both the private and public sectors.

Should agents and brokers (the primary audience for this blog) consider passage of health care reform the death knell of their profession? No. Change will be required (something that has been required with some regularity every few years for the past three decades). But thanks to the efforts of the National Association of Health Underwriters and the hundreds of brokers who have engaged in the health care reform debate, change does not mean elimination for today’s professional brokers. And the reality is, even if Congress failed to pass health care reform brokers faced substantial changes to their profession in the next few years. The status quo was going to change by legislative fiat or as the result of internal stresses. At least now we have a better sense of what the new world will look like.

The health care reform bills passed by the House of Representatives today draw the outlines of this new world. It will be up to judges and regulators and future Congresses and state legislatures to fill in the details. As mentioned previously, neither the health care reform process or debate is over yet.

So yes, the House of Representatives made history tonight. And it’s only the beginning.

What ultimately prevailed was the realization it was now or never. The Senate passed health care reform legislation – a package that few considered ideal, but that Democrats determined was better than the status quo. This was a historical vote – the first time both the House and Senate have passed comprehensive, near-universal health care reform bill. Nonetheless, Senator Majority Leader Harry Reid summed up the meaning of the event saying “This morning isn’t the end of the process, it’s merely the beginning. We’ll continue to build on this success to improve our health system even more. But the process cannot begin unless we start today … there may not be a next time.”

Whatever health care reform bill ultimately emerges from the conference committee it will a product of the Democratic party. Republicans were unanimous in their opposition to HR 3590, the Patient Protection and Affordable Care Act. That is unlikely to change moving forward. This reflects both ideology and a political calculation. While Democrats reached the high water mark of their majority in the 2008 election (meaning they were going to lose seats in 2010 regardless of what happened with health care reform), whether the GOP’s political calculation pays off in the long run will be determined by how independent, moderate voters perceive the health care reform package not in 2010, but in 2012 and beyond. For that verdict we’ll have to wait. In the meantime, for better or for worse, history was made this morning in the United States Senate.

It is both amusing and disappointing to see the silliness that surrounds the serious issue of health care reform. Examples abound: calls for keeping the government out of Medicare (a government-run health plan, for those keeping score at home); claims that a government-run plan will usher in an era of lower medical premiums buying better coverage; promises of death panels; and the list goes on.

The foolishness that seems to crop up most often are criticizing the bill for being too long. Some opponents of the bill have taken to printing out the 2,074 page Senate Health Care Reform bill (even longer than the House health care reform legislation which came in at 1,990 pages) and lugging it around on their shoulder. Or taping the pages together and rolling the result down the Capitol steps. The theory, apparently, is that health care reform is such a simple problem, it should be easy to accomplish in just a few pages.

How many words would it take to legislate the status quo? Considering the need to create Medicare, Medicaid, Veterans health care, regulate the private market, etc. etc., my guess is we’re talking about reams of paper.

Let’s focus on what matters – what the legislation does – not how many words it takes to do it. There’s plenty of substantive issues to debate. And now’s the time to do it.

The Senate has just spent most of today (Saturday) engaging in a debate on whether to allow a debate on comprehensive health care reform. Later this evening 58 Democrats and 2 Independents will vote to allow Majority Leader Harry Reid’s health care reform bill come to floor for debate and consideration of amendments. 40 Republican Senators will vote unanimously against allowing this to happen. Senator Reid’s Patient Protection and Affordable Care Act is still alive. It is unlikely to survive in its current form for long, however.

Don’t get me wrong. Tonight’s vote is significant, very significant. The vote is a test of President Barack Obama’s and Senator Reid’s ability to line up enough votes to keep the bill alive. The debate leading up to the vote has been an opportunity for Republican Senators to present their opposition to HR 3590. (Yes, the Senate has taken a bill passed by the House and moved to the Senate, gutted that language and substituted their health care reform package. Consequently, the Senate legislation has a House bill number.) And the vote to allow debate has served as an action forcing event, sort of, for Democratic moderates.

We’ll learn more about the changes moderates will demand over the several weeks before a final vote on health care reform is held in the Senate. Democratic leaders are hoping to hold that vote before the end of the year. The legislation would then move on to a conference committee that will attempt to reconcile it with legislation the House passed earlier this month. More importantly, that conference committee, made up of an equal number of Senators and House members, will seek to fashion legislation they hope will earn the support of a majority of House members and 60% of Senators. As I’ve noted before, passage of legislation by the Senate is merely the final playoff game. The World Series — the conference committee — is yet to come.

Uniting the Democrats to allow debate on health care reform is a victory for the Obama Administration and for Senator Reid personally. That it took this much effort, however, demonstrates the challenges they yet face. Republicans appear to be uniting in opposition to the legislation. Even Senator Olympia Snowe, who voted for a health care reform bill in the Senate Finance Committee, is expected to vote against bringing HR 3590 to the floor.

I’ve written before about the power moderates have to determine if health care reform legislation will pass Congress and what the final bill will contain. Now we’ll see that power put forward. Some of what they’ll ask for will be parochial. (That there’s a provision in Senator Reid’s bill that would send additional Medicaid money to Senator Landrieu’s state of Louisiana is neither a coincidence or accidental). But most of their demands wil concern public policy issues. Moderate Democrats tend to be more fiscally cautious than their more liberal colleagues, giving them pause to legislation that greatly expands governmental powers, spends nearly a trillion dollars over the next decade and taxes corporations and individuals to pay for it. These are the issues on which they will focus.

Republicans will have their own pet issues, but those are unlikely to influence the outcome. Having already declared their unmoving opposition to any health care reform Democrats could claim keeps their campaign promises, the GOP has removed themselves from negotiations. (A couple of the Republicans, most notably Senator Snowe and her colleague from Maine, Susan Collins, might vote what moderate Democrats fashion. But whether they’ll be able to insert provisions without committing to voting for the bill if their amendments are accepted is unlikely.

We don’t know yet what changes to HR 3950 moderate Democrats will demand, but the possibilities are extensive. They could eliminate a public option — or at least postpone its implementation until after other reforms have had a chance to take effect. They could demand additional cost containment provisions. They could strengthen — or weaken — the requirement that all consumers obtain coverage. Certainly they will modify what taxes and fees are imposed to pay for health care reform.

What’s important to remember is that moderate Senators will have two shots at the bill. They’ll extract as much as they can during the current Senate debate. Then at least two or three of them are likely to agree to vote for the bill “in order to keep the process moving forward.” However, they’ll also make clear they want significant changes made to the legislation by the conference committee before they’ll commit to a vote that would place the legislation on the president’s desk. Liberals will insist they have compromised all they can, but in reality, the moderates (and the liberals) know that the progressives are likely to accept any legislation that can be called “health care reform” with a straight face. And as politicians, they have great skill in passing the straight face test.

Yes, Democrats have won the debate on whether to debate health care reform. What legislation eventually emerges from the Senate, if any, is still uncertain.